Union Budget bets big on AI research, deeptech & GCCs, It was inevitable and it was necessary. At a time when the world’s superpowers wage an AI war, the DeepSeek announcement came as a real shocker to India, despite its massive talent pool, burgeoning tech sector and growing digital ecosystem. After all, AI is not merely a tool for convenience but a transformative force that will shape industries and solve critical challenges.
In this backdrop, the Union Budget’s message is loud and clear: Let’s not miss the bus. This year’s fiscal exercise has reinforced India’s ambition to emerge as a global technology powerhouse by driving AI, deep tech, and cutting-edge research. To begin with, the IndiaAI mission has seen an allocation of Rs 2,000 crore, the endeavour being to strengthen the AI ecosystem and build a low-cost foundation model.
Other than that, several significant initiatives have been unveiled that present encouraging prospects for the technology and digital infrastructure sector. Industry leaders view them as a bold blueprint for a stronger Digital India, prioritising technology-led development, AI-driven modernisation, and inclusive economic growth.
“There is no doubt AI has the potential to to transform every sector of the Indian society, from boardrooms to classrooms, commerce to communities, and finance to farmers. It is heartening to see the government’s vision of building Viksit Bharat by 2047 with AI and technology,” said Puneet Chandok, president, Microsoft India & South Asia. “India must capitalise on AI opportunities and and leverage its young and dynamic population to create a tech-forward workforce for India and for the world,” he said in reference to the plans to establish a centre of excellence for AI in education.
Take for instance, the Rs 10,000 crore Fund of Funds for startups and the proposed Deep Tech Fund of Funds that signal a robust push for innovation, particularly in high-impact sectors. India boasts of a vibrant startup ecosystem, and adequate funding is crucial for its continued growth. The crucial fund of funds will play a key role in boosting domestic capital in the startup sector.
On the other hand, the proposed deeptech fund should be viewed through the DeepSeek lens of what can be done with relatively small amounts of capital when provided to agile and creative teams. This will spur investment into critical areas like AI, quantum computing, and advanced materials. “The Deep Tech Fund of Funds will empower India’s deep-tech entrepreneurship and enhance the nation’s global competitiveness in the AI race,” said Prabhu Ram, VP – Industry Research Group, CyberMedia Research (CMR).
According to Rajesh Nambiar, president, Nasscom, a strong commitment to research, innovation, and deeptech development is essential for positioning India as a global technology leader. The initiative aligns with Nasscom’s recommendations for structured deeptech funding, ensuring greater access to patient capital for early-stage and growth-stage startups. Such a fund, when implemented, can help drive India’s leadership in frontier technologies such as AI, quantum computing, semiconductors, and space tech.
This year’s Budget has laid out a clear roadmap for developing the skill sets of the future workforce to accelerate growth with skilled labour and meaningful employment. The emphasis on scientific thinking is seeded at the school level with the setting up of 50,000 Atal Tinkering Labs to cultivate a culture of innovation among young minds.
Also, the decision to grant 10,000 fellowships at IITs, IISCs, and other premier institutions under the PM Research Fellowship Scheme shows an appreciation of the research ecosystem.
According to Sindhu Gangadharan, MD, SAP Labs India, the Rs 500 crore allocation for a Centre of Excellence (CoE) for AI in education is a transformative step toward integrating AI-driven solutions into learning frameworks, and equipping the workforce of tomorrow with future ready capabilities.
“As digital adoption surges, specialised skills in cloud, AI, and enterprise technology will be critical to sustaining India’s leadership in the global technology economy,” she added.
The expansion of five IITs, established after 2014, with an additional 6,500 seats and the establishment of a new CoE in education — building on existing CoEs in agriculture, health, and sustainable cities — will significantly bolster India’s future talent pipeline.
Continuous efforts in upskilling and reskilling are critical as employers increasingly seek specialised skills in fields like AI,said Sumeet Mathur, SVP & MD, ServiceNow India Technology & Business Centre.
“India benefits from one of the lowest talent demand/supply gaps globally and is poised to become a talent surplus by 2030, driven by its strong demographic dividend. As the country transitions from downstream to upstream research and innovation capabilities, the Budget provides the right impetus to facilitate this shift,” said Ram.
A key decision by the government to drive the digital economy is the formation of a national framework for promoting global capability centres (GCCs) in Tier-II cities. Over the past few years, GCCs have experienced significant growth, employing over 1.9 million professionals in 1,700 centres.
However, as GCCs mature and move-up the value chain, attracting and retaining specialised talent remains a teething challenge. The new initiative is expected to contribute to workforce stability and retention as connectivity and infrastructure improve in areas beyond the existing GCC hubs of Bengaluru, Hyderabad, Chennai etc.
